Close Brothers Group PLC (CBGPF) Full Year 2025 Earnings Call Highlights: Navigating Challenges …

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• CET1 Capital Ratio: Achieved 13.8% as of 31 July 2025, or 14.3% following the sale of Winterflood.

• Adjusted Operating Profit: 144 million for the 2025 financial year.

• Operating Loss Before Tax: 122 million, driven by 267 million of adjusting items.

• Net Interest Margin: 7.2% with a bad debt ratio of 1%.

• Loan Book: Reduced by 4% to 9.5 billion.

• Annualized Cost Savings: 25 million achieved by the end of FY25, with an additional 20 million expected annually over the next three years.

• Provision for Motor Finance Commissions: 165 million, unchanged from the first half.

• Asset Impairment Charge: 30 million due to exiting the vehicle hire business.

• Adjusted Operating Expenses: Increased by 3%, driven by legal and professional fees.

• Profit After Tax from Discontinued Operations: 49 million.

• Final Dividend: No final dividend for the 2025 financial year.

• Funding: Total funding of 12.7 billion with a liquidity coverage ratio of 1,012%.

• Retail Deposits: Increased by 20% to 6.8 billion.

Release Date: September 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Close Brothers Group PLC (CBGPF) significantly strengthened its capital position, achieving a CET1 capital ratio of 13.8% or 14.3% following the sale of Winterflood.

• The company delivered 25 million of annualized savings by the end of FY25, ahead of initial guidance, and plans to deliver an additional 60 million in savings over the next three years.

• Close Brothers Group PLC (CBGPF) has simplified its portfolio by selling non-core businesses and repositioning its premium finance business towards more attractive commercial lines.

• The company maintained a strong net interest margin of 7.2% and a resilient credit quality with a bad debt ratio of 1%.

• Close Brothers Group PLC (CBGPF) is well-positioned to capture growth opportunities in underserved SME lending markets in the UK and Ireland.

• The company reported an operating loss before tax of $122 million, driven by 267 million of adjusting items, including a 165 million provision related to motor finance commissions.

• Close Brothers Group PLC (CBGPF) incurred a 30 million asset impairment charge due to exiting its loss-making vehicle hire business.

• The loan book reduced by 4% due to loan book moderation measures and lower activity in some markets.

• The company is not paying a final dividend for the 2025 financial year due to uncertainty around motor finance commissions.

• Close Brothers Group PLC (CBGPF) faces ongoing challenges with cost pressures, including legal and professional fees related to motor finance commissions.

Q: Regarding the 33 million provision for proactive remediation in motor finance due to early settlements, how confident are you that the issue is contained, and could there be a regulatory fine? Also, do you expect profit before tax (PBT) to increase in 2026/2025? A: Mike Morgan, Group Chief Executive: The issue is specific to motor finance, and we have fixed the processes. It goes back quite a long time, predating the current management team. Fiona McCarthy, Group Chief Finance Officer: We are not providing specific profit guidance for 2026, but we expect some impact from the runoff of the loan book and Novitas. Management’s remuneration is aligned with achieving double-digit return on tangible equity by 2028.

Q: Can you clarify the cost savings and restructuring costs related to premium finance and other below-the-line charges for 2026? A: Fiona McCarthy, Group Chief Finance Officer: The 20 million cost savings over five years are part of the 60 million annualized savings target. The 15 million cost to achieve these savings will be spread over time, with some flowing through as restructuring costs. We expect single-digit millions in motor commissions costs and 5 to 10 million in restructuring costs for 2026.

Q: How has the company’s reputation been affected by recent events, and what steps are being taken to regain confidence? A: Mike Morgan, Group Chief Executive: The events have shaken the organization, but we have built a strong capital buffer. We had to moderate loan book growth, which was disappointing, but demand is returning. We are now focused on core businesses with growth potential, and we believe we can achieve 5-10% growth through the cycle.

Q: Can you provide more details on the cost optimization program and the expected net loan book growth? A: Mike Morgan, Group Chief Executive: We expect 5-10% growth over the cycle, but there is some pressure in the SME segment due to economic conditions. Fiona McCarthy, Group Chief Finance Officer: We are committed to 20 million per annum in cost savings over the next three years, with a focus on consolidation, outsourcing, and technology simplification. The guidance reflects inflationary pressures and cost drivers.

Q: How does the Supreme Court ruling affect the 165 million provision for motor finance commissions, and what is the worst-case scenario for compensation costs? A: Mike Morgan, Group Chief Executive: The ruling was helpful, but we await the FCA’s consultation. Fiona McCarthy, Group Chief Finance Officer: The ruling narrows the range of possibilities, supporting the existing provision of 165 million. We are not sharing worst-case scenarios, but the provision is based on probability-weighted outcomes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.